Churches vs. the IRS: Showdown on Pulpit Freedom Sunday

by AccountingWeb on Sep 30 2008printer friendly

Last Sunday, parishioners in churches across the country may have been wondering if their hymns would be replaced by the theme song from "The Good, The Bad, and The Ugly," as their pastors pushed for an IRS showdown. They called it Pulpit Freedom Sunday. Backed by the Arizona-based Alliance Defense Fund, 33 pastors in 22 states deliberately violated the IRS regulation that says churches and other not-for-profits cannot substantially participate in politics by endorsing or opposing a candidate.

The IRS regulation in question is called the Johnson Amendment, sponsored by then-Senator, Lyndon B. Johnson in 1954. Some historical documents say that Johnson put forth the bill because two notable not-for-profits were campaigning for his opponent.

Supporters of the prohibition say that, in exchange for giving up the right to endorse candidates, not-for-profits gain tax-exempt status. That amounts to a subsidy they say, and churches that are unwilling to abide by the regulation should forfeit the subsidy.

But Erik Stanley, senior legal counsel for ADF disagrees. In a press release on the ADF Web site, he said:

"Pastors have a right to speak about Biblical truths from the pulpit without fear of punishment. No one should be able to use the government to intimidate pastors into giving up their constitutional rights. If you have a concern about pastors speaking about electoral candidates from the pulpit, ask yourself this: should the church decide that question, or should the IRS?"

"ADF is not trying to get politics into the pulpit. Churches can decide for themselves that they either do or don't want their pastors to speak about electoral candidates. The point of the Pulpit Initiative is very simple: the IRS should not be the one making the decision by threatening to revoke a church's tax-exempt status. We need to get the government out of the pulpit."

From the time the Constitution was ratified in 1788, says Stanley, until the Johnson Amendment was passed, churches were free to preach about candidates. "Churches are exempt from taxation under the principle that there is no surer way to destroy religion than to begin taxing it. As the U.S. Supreme Court has noted, the power to tax involves the power to destroy. The real effect of the Johnson Amendment is that pastors are muzzled for fear of investigation by the IRS."

The editor of the Chillicothe Gazette in Chillicothe, OH pointed out, many important changes in the law started in the pulpit. The editor cites abolition and later, civil rights which Reverend Martin Luther King Jr. advocated for from the pulpit, as well as prison reform and child welfare reform.

If pastors are worried about the repercussions, there is no sign of it. They are well aware of the possibilities and are making no attempt to avoid IRS scrutiny. Barry Lynn, the Executive Director of Americans United for the Separation of Church and State has pledged to inform them about the sermons. But he needn't bother, since the pastors are not trying to avoid IRS scrutiny. In fact, they plan to send copies of their sermons to the tax agency themselves.

An IRS spokesman confirmed in a phone call that churches do not have to file for tax-exempt status. By their nature, they are automatically 501(C)3 organizations, and they are expected to follow the rules pertaining to 501(C)3s. To revoke a church's tax-exemption, the IRS must prove that the organization is not a "bona fide" church.

What Could Happen?

Participating churches could suffer the fate of the Church at Pierce Creek in Binghamton, NY, which made a bold stand in another election. Four days before the 1992 election, that church published a full page advertisement in the Washington Times and USA Today, that read "Christian Beware. Do not put the economy ahead of the Ten Commandments." Because of Clinton's well-known support for abortion on demand, homosexuality, and free condoms for teenagers in public schools, the church reminded Christians of the Bible's stand on those issues and asked, "How then can we vote for Bill Clinton?"

Following an investigation and trial, the church did lose its tax-exempt status, but continues to operate as a not-for-profit.

If the IRS does challenge the tax-exempt status of any of the churches that participated in Pulpit Freedom Sunday, the Alliance Defense Fund has stated it will file a federal lawsuit on the basis that prohibiting pastors from talking about the ethical issues of politics from the pulpit violates the rights of free speech and religious freedom. In fact, if the IRS fails to take action, the pastors of these churches backed by the ADF have vowed to keep up their political activity until the tax agency does act.

What does the IRS say about this challenge?

Right now, they are not saying much. Here is the prepared statement they issued in response to a phone inquiry:

We are aware of recent press reports, and will monitor the situation and take action as appropriate.

Information about the applicable rules on political activity, including the IRS's work in this area since 2004, is on the IRS Web site[1]

"Education has been and remains the first goal of the IRS's program on political activity by tax-exempt organizations," said Lois G. Lerner, director of the IRS Exempt Organizations Division.

The prohibition on political intervention by 501(c)(3) organizations was enacted by Congress more than 50 years ago, and the statute has previously been upheld by the courts. See Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000). The IRS will continue to handle all allegations about political intervention this election year through its Political Activities Compliance Initiative (PACI).

Churches inserting themselves into political campaigns is nothing new. In addition to the 1992 example, a liberal church in California underwent a two-year investigation for its from-the-pulpit opposition to the Iraq war just days before the 2004 election. The IRS concluded that the church violated the regulation, but did not revoke the tax-exempt status. Earlier this year, another liberal church was investigated for allowing Barack Obama to speak to their General Synod in 2007, but the investigation was eventually dropped. Some critics say this pattern of investigating without enforcement only blurs the lines between what churches can and cannot do.

According to the OMB Watch Web site, the Internal Revenue Service has agreed to review a complaint by three former top IRS officials that Pulpit Freedom Sunday violates federal tax law.